Gas company must make lease extension decision

Inflection has agreement covering 3,000 acres

Jan. 6, 2011

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JOHNSON CITY -- A gas lease between a local landowner coalition and a natural gas company faces a deadline at the end of the month that could lead to its extension or termination, the coalition's attorney said Thursday.

Speaking at a panel discussion on natural gas drilling at the Gannett Central N.Y. Production Facility, South Maine Millennium Coalition attorney Robert Wedlake said he will speak to executives from Denver-based Inflection Energy next week to learn their plans for the coalition's lease.

The deal, which includes over 140 parcels and 3,000 acres and was signed last February, paid landowners $1,000 per acre for the first year. Inflection can extend the deal for an additional year at $1,000 per acre.

Drilling in the state's portion of the gas-rich Marcellus Shale formation has been on hold, however, as the state Department of Environmental Conservation reviews its permitting guidelines. The company can extend the deal, but defer the payment until the end of the year as long as New York's moratorium is still in effect. If that's the case, either the company or the individual landowners can elect to back out of the lease on Dec. 31.

"Inflection has shown that they are willing to take a gamble," said Wedlake, a partner at Hinman Howard & Kattell. "They're willing to bet the rigorous, honest DEC review will be completed and development will go forward."

The company's chief executive did not return a call for comment Thursday. If Inflection chooses to extend, it would face a similar one-year option in February 2012 and have a three-year option the following year.

Wedlake served on the panel along with Assemblywoman Donna Lupardo, D-Endwell; Toxics Targeting President Walter Hang; and Independent Oil & Gas Association of New York Executive Director Brad Gill. The discussion was part of the Greater Binghamton Chamber of Commerce's Broome Leadership Institute.